European equity markets bounced strongly Monday, following a week of downbeat sessions. In fact, European stock markets had their worst week since June, as investors became nervous about the U.S. “fiscal cliff”, what’ll happen next for Greece and Spain in the euro-zone debt crisis and as political tensions in the Middle East worryingly increased.

Our first taste of today’s broker notes comes with drinks maker Diageo which has been upgraded by Barclays. The brokerage noted that the London-based maker of Johnnie Walker Scotch whisky and Smirnoff vodka has an increasing presence in high-growth emerging markets. It also likes the proposed acquisition of India’s United Spirits.

“This strength is not currently reflected in valuation, nor do we think any value is ascribed to the increased likelihood of the liberalization of India’s imported spirits tax regime,” said the brokerage.

Goldman Sachs downgraded Lloyds Banking Group to “neutral” from “buy” and raised Barclays to “buy” from “neutral”. On Lloyds, the brokerage pointed out the recent rally in the share price, the stock having risen from 25.36p in May to 44.69p in today’s trading. Its analysts said they believe that there is now more balance between risk and reward. Goldman Sachs continues to view the group as well placed to generate attractive returns and sees substantial longer-term upside in the stock.